Apres Davos

January 30, 2018 by Denis Pombriant

Sun setting on Davos

The just concluded World Economic Forum (WEF) in Davos, Switzerland, was a time for world political and business leaders to come together to think bigly. But it would be a mistake to think that a confab of leaders would produce the last word on anything though you can certainly see the outlines of the future from what they all said.

From another perspective though, Davos, looks like an echo chamber of the bright and the powerful talking about what would be good for them, not necessarily what would be good for the global community. An article from the conference by Joe Kaeser, president and CEO of Siemens, AG provides a synopsis of the meet-up and its ideas giving a strong and unintentional implication of what could go wrong.

He begins with a big idea percolating at the conference, the Fourth Industrial Revolution:

Although we have only seen the beginning, one thing is already clear: the Fourth Industrial Revolution is the greatest transformation human civilization has ever known. As far-reaching as the previous industrial revolutions were, they never set free such enormous transformative power.

This would be the first time a revolution of this type was telegraphed in advance. Usually they are discovered by historians and other social scientists trying to figure out how we got here. Kaseser implies we know where we’re going and we do but only in a general sense. We need to maintain some respect for randomness as expressed by Ian Malcolm, the character in “Jurassic Park”. Malcolm was always reminding us to consider the unknown unknowns. For him it was living things mutating, for us it’s the free market, mutating. As for great transformations, let’s not forget inventing agriculture and civilization back in the Bronze Age.

Kaeser’s piece is really a self-serving paean to technology, which his company knows a thing or two about. But it should not be taken as a recipe for future success. He writes,

If we get the revolution right, digitalization will benefit the nearly 10 billion humans inhabiting our planet in the year 2050. If we get it wrong, societies will be divided into winners and losers, social unrest and anarchy will arise, the glue that holds societies and communities together will disintegrate, and citizens will no longer believe that governments are able to fulfill their purpose of enforcing the rule of law and providing security.

Acknowledging there will be 10 billion of us on this tiny planet by mid-century is good. But it would be better if he acknowledged that there are more than 60 million people on the run from their countries according to the UN, because they are (mostly) climate refugees. Another 780 million people live on less than $1.90 per day. Provisioning for these, and other, classes of unfortunate people, classes that are likely to grow by 2050, should be something that Siemens and the other engineering and tech companies at Davos will of necessity have a hand in. Absent that the descendants of the politicians in attendance will have some harsh conflicts to settle one way or another.

In each country, in different ways, a water crisis has triggered some combination of civil unrest, mass migration, insurgency or even full-scale war.

It traces how declining water resources turn farms to wasteland incapable of producing crops to feed domestic populations. Sengupta writes of Syria,

Its drought, stretching from 2006 to 2009, prompted a mass migration from country to city and then unemployment among the young. Frustrations built up. And in 2011, street protests broke out, only to be crushed by the government of Bashar al-Assad. It piled on to long-simmering frustrations of Syrians under Mr. Assad’s authoritarian rule. A civil war erupted, reshaping the Middle East.

The Syrian mess, along with Nigeria, Somalia, and the potentially nuclear tipped Iran, could give very different meaning to Kaeser’s trope “If we get it wrong, societies will be divided into winners and losers, social unrest and anarchy will arise.” By the way, that’s not even all of the bad news. The Times article also offers this,

You can count China and India in that group right now. Both countries have nukes and they might also have the wherewithal to escape that eventuality but others might not be so lucky.

My take

It’s great that Davos turned its attention to the world at mid-century. But it would be greater if they and we didn’t stride around thinking that we have it all figured out. We don’t. The free market and human behavior can assure us of this. The problem of too many people and not enough resources should be top of mind in a gathering like this for if we can’t discuss these hard issues at Davos, where can we discuss them? And if the answer is that we can’t discuss them anywhere then what’s the point of rich people swarming over the Swiss Alps in winter like ants at a picnic?

Discussing 4IR in mostly technological and economic terms short-changes everybody. It frames a discussion of the future that only extends the current technology paradigm but doesn’t replace it. The paradigm has served us well but the demands of the future include more jobs and more resources to support more people, not automation and commoditization. They are polar opposites.

But the free market is operating just fine. Next year virtually every carmaker on the planet will begin bringing out electric vehicles in quantity. That is a signal event that will transform the world creating new market demands and reshaping the world. It will help to determine, what we make and how we sell it and where and how we live. That’s a revolution. Davos will catch up but as a fast follower and not as the innovator it fancies itself.